Top 10 Blue Chip Stocks in Australia for 2025
With 2025 fast approaching, we explore Australia's rich resource sector and consider which S&P/ASX 20 blue chip stocks we should buy.
In Australian market, the concept of blue chip stocks can be described by the S&P/ASX 20 index, which is composed of the 20 largest companies by market capitalization on the Australian Stock Exchange. These companies are generally strong financially, have long-term growth potential, strong stock performance and large market capitalization. We predict that in 2025, the Australian stock market will continue to show its resilience and attractiveness, especially against the backdrop of global economic turmoil.
In this article, we will discuss what blue chip stocks are and focus on the 10 best blue chip stocks in Australia in 2025.
What are blue chip stocks
Blue chip stocks are stocks of listed companies with large market capitalisation, stable performance and significant influence in their respective industries. Blue chip stocks on the Australian stock market tend to be concentrated in key sectors such as financials, materials and healthcare. Although the market can be affected by factors such as the global economic environment, changes in monetary policy and volatility in commodity prices, Australia's blue chip stocks are still seen as a quality choice for long-term investment. Due to their strong profitability, blue chip stock companies usually provide stable dividend payouts, attracting investors who seek stable returns. As a result, blue chip stocks are an important part of many investors' portfolio construction, especially those seeking sound investment and long-term appreciation.
Benefits of investing in blue chip stocks in Australia
The advantages of investing in blue chip stocks in Australia are mainly in the following areas:
Earnings and dividends: Blue chip stocks in Australia are typically sourced from companies with large market capitalisations and stable performance, which tend to provide stable dividend payments that generate consistent cash flow income for investors. Blue chip companies typically have a stable track record of performance and are able to provide relatively stable returns to investors. The dividend policy of these companies is usually more stable and can provide investors with more stable dividend income.
Lower risk: Blue chip companies are generally considered lower risk due to their size and stable profitability. In times of high market volatility, the relatively more stable prices of blue chip stocks can reduce overall portfolio volatility and risk. This anti-cyclicality of blue chip stocks makes them a safe haven for investors in times of increased economic uncertainty. In addition, as these companies are usually financially strong and well-managed, they are better able to cope with market and industry volatility.
Value-added potential: While blue chip stocks may not have the same short-term gains as some popular growth or small-cap stocks, their steady earnings growth and dividend returns can create considerable wealth for investors in the long run. Blue chip companies tend to have a competitive advantage in their field and are able to continue to grow and expand their market share. This growth potential, coupled with stable dividend payments, makes blue chip stocks an important part of a long-term investment strategy.
Liquidity: Blue chip stocks have better liquidity in their shares due to their large market capitalisation and high visibility. This means that investors can buy and sell these stocks more easily and with relatively low transaction costs. High liquidity also means that investors can move in and out of the market quickly when market conditions change, allowing them to adjust their portfolios in time to cope with market volatility.
Tax incentives: Tax deductions (Franking Credits) and even tax refunds on dividends in Australia, and the ability to offset current year investment losses against future investment profits (Capital Loss Carry forward), provide additional tax advantages for investors. This tax benefit can increase investors' net income, making blue chip investments more attractive. The dividend tax deduction reduces investors' tax burden on dividend income, while the Capital Loss Carry Forward provides investors with tax planning flexibility.
Top 10 blue chip stocks in Australia
Australia's top 10 blue chip stocks include a range of companies with large market capitalisation and consistent performance. Below are the Australian blue chip stocks that will outperform in 2024:
1. BHP Group Ltd (ASX: BHP)
BHP Group Ltd is a main global mining company with interests in copper, iron, coal, oil and gas resources. The company operates globally and has significant mining assets particularly in Australia, the Americas and South Africa. Regarding dividends, BHP Group offers a relatively stable dividend return. As of 18 October 2024, the company has a dividend yield of 5.16% and a payout ratio of 97.87%. As one of Australia's blue-chip stocks, BHP Group Ltd not only has a significant position in the mining sector, but also offers investors a stable dividend income and long-term appreciation potential.
2. Commonwealth Bank of Australia (ASX: CBA)
Commonwealth Bank of Australia (ASX: CBA) is one of the largest banks in Australia, offering a comprehensive range of financial services including retail, commercial and institutional banking, fund management, superannuation, insurance, investment and brokerage services. It has business operations in Australia, New Zealand, Asia, the United States and the United Kingdom. CBA's share price has performed well in 2024, with share price increases and dividends resulting in a return on investment of more than 20%.
3. CSL Ltd (ASX: CSL)
CSL Ltd (ASX: CSL) is an Australian global biotechnology company focused on the research, development, manufacture and marketing of products for the treatment and prevention of serious human diseases. The Company's product range includes plasma derivatives, vaccines, sera and cell culture reagents for medical and genetic research and manufacturing applications.CSL offers a relatively stable dividend return. The company declared a final dividend of A$2.50 per share for the 2024 financial year, bringing the full-year dividend to A$4.50 per share, up 17 per cent from A$3.85 per share in the previous financial year.
4. National Australia Bank Ltd (ASX: NAB)
National Australia Bank Ltd (ASX: NAB) is a major financial services bank in Australia, which has a significant market share in the Australian commercial banking industry. NAB provides services such as personal banking, commercial banking, private banking, corporate banking, institutional banking, and wealth management services. In terms of recent share price performance, according to data from 24 October 2024, NAB's share price has increased, with a change of 36.20% over the past year, suggesting that NAB's stock has performed well over the period. National Australia Bank posted 2024 first-half net operating income of AU$10.14 Billion and net profit of AU$3.49 Billion.
5. Westpac Banking Corporation (ASX: WBC)
Westpac Banking Corporation offers a wide range of financial services including personal banking, business banking, and wealth management services. Westpac's share price has shown some volatility over the past 52 weeks with a range of A$20.30 to A$33.78. Westpac Banking said its unaudited net profit for the three months to June was 1.8 billion Australian dollars (US$1.2 billion), up 6 per cent from the quarterly average for the first half.
6. Macquarie Group Ltd (ASX: MQG)
Macquarie Group Ltd is a global financial services group with operations in 33 markets across a wide range of sectors including asset management, retail and commercial banking, wealth management, leasing and asset finance, market access, commodities trading, renewable energy development, professional consultancy, financing and principal investment.
7. Australia and New Zealand Banking Group Ltd (ASX: ANZ)
Among Australia's top four banking institutions, the Australia and New Zealand Banking Group (ANZ) stands out for its comprehensive suite of financial solutions, which encompass personal finance, business banking, corporate and institutional services, as well as wealth management. ANZ has operations in Australia, New Zealand and the Asia-Pacific region, with a particularly strong market presence in New Zealand.In the first half of 2024, ANZ's cash profit declined slightly by 1 per cent to A$3,552 million, while the interim dividend remained unchanged at A$83 cents per share, suggesting that ANZ provides a relatively stable dividend return.
8. Woodside Energy Group Ltd (ASX: WDS)
Woodside Energy Group focuses on the exploration, assessment, development, production, and sales of hydrocarbons. The company's business covers liquefied natural gas (LNG) projects, including the North West Shelf Project, Pluto LNG, Australian petroleum projects, and the Wheatstone Project. Woodside Energy also plans to invest $5 billion (approximately 7 billion Australian dollars) in the new energy sector over the next decade to strengthen its strategic position in the transition to low-carbon energy, with investment opportunities including hydrogen and solar thermal power generation.
9. Fortescue Metals Group Ltd (ASX: FMG)
Fortescue Metals Group Ltd (ASX: FMG) is an Australian iron ore mining company known for its efficient operations and low-cost production. FMG is the world's fourth-largest and Australia's third-largest producer of iron ore, specialising in the exploration, development, production and sale of iron ore. The company has three major producing mines in the Pilbara region of Western Australia and exports more than 180 million tonnes of iron ore annually to key markets including China, Japan and South Korea. The company also plans to invest US$5 billion (approximately A$7 billion) in new energy over the next ten years to strengthen its strategic position in the low-carbon energy transition, involving investment opportunities such as hydrogen and solar thermal power.
10. Wesfarmers Ltd (ASX: WES)
Wesfarmers Ltd is a large, diversified group of Australian companies operating in a number of sectors including retail, chemicals, fertilisers, coal mining and industrial and safety products. The company owns a number of well-known brands including Bunnings, Officeworks, Kmart and Target.Wesfarmers has extensive operations in both Australia and New Zealand and operates globally. As of 24 October 2024, Wesfarmers has a market capitalisation of $79,117 million and a price-to-earnings ratio (static) of 30.89.
How to buy blue chip stocks in Australia
Australian investors can trade blue chip stocks on moomoo, you can follow the steps below:
Open an account: Firstly, you will need to register an account on the moomoo platform. Moomoo offers a quick and easy online account opening experience and you can register via the official website or by downloading the moomoo mobile app.
Deposit: Once you have opened an account, you will need to transfer funds to your moomoo account. You can do this by connecting your bank account. Moomoo supports a variety of deposit methods, including ACH transfers and Wire Transfers, which are free.
Choose stocks: On the moomoo trading platform, you can use the search function to find Australian blue chip stocks you want to buy. Moomoo provides real-time quotes from a number of markets around the world, including the Australian stock market.
Place a trade: Once you've found a stock, you can choose to buy it based on real-time quotes and your investment decision. You can set up different types of orders, such as limited orders or market orders. moomoo provides an intuitive trading interface that makes it easy for you to place orders.
Monitor your investment: After purchasing stocks, you can monitor your investment performance on the moomoo platform and get real-time market news and stock information.
Final words on blue chip stocks in Australia
Australian blue chip stocks are favoured by investors for their stability and long-term growth potential. They typically come from companies with large market capitalisations and stable performance, and are able to provide stable dividend distributions. The share prices of these companies are relatively less volatile and offer a degree of protection against market uncertainty.
However, investing in ASX blue chip stocks also requires attention to risk. Factors such as market volatility, changes in interest rates, and economic cycles can affect blue chip stock performance. In addition even blue chip stocks may face challenges due to changes in the industry, company business strategies or changes in the macroeconomic environment.
